<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-QSB
(Mark one)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the quarterly period ended March 31, 1997
--------------
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
-------------- ---------------
Commission File No. 33-11935
--------
DENTAL SERVICES OF AMERICA, INC.
----------------------------------------------
(Name of small business issuer in its charter)
DELAWARE 8021 59-2754843
- ------------------------- ---------------------------- -------------------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation Classification Code Number) Identification No.)
or organization)
12000 BISCAYNE BOULEVARD, #200
MIAMI, FLORIDA 33181
- ---------------------------------------- ------------------
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (305) 895-0716
--------------
Check whether the issuer (1) has filed all reports required to be Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO
--- ---
The number of shares outstanding of the issuer's common stock, $.001 par value
per share as of March 31, 1997 is 8,090,464
<PAGE>
Item 1. Financial Statements
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997 AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
ASSETS
MARCH 31 SEPT 30
---------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 183,416 $ 559,272
Accounts receivable 143,118 49,308
Dental supplies inventory 69,718 56,990
Marketable securities, at cost 13,735 9,294
Prepaid expenses 157,091 9,041
Other current asset 10,171 2,800
---------- ----------
TOTAL CURRENT ASSETS 577,249 686,705
---------- ----------
Furniture and equipment, less accumulated
depreciation of $28,575 and $28,052 188,869 161,172
---------- ----------
OTHER ASSETS
Prepaid registration costs 38,604 34,443
Organization costs less accumulated
amortization of $387 at December 31 169,537 7,750
---------- ----------
208,141 42,193
---------- ----------
TOTAL ASSETS $ 974,259 $ 890,070
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses 49,002 67,690
Loans payable 96,450 21,450
---------- ----------
TOTAL CURRENT LIABILITIES 145,452 89,140
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value. Authorized
10,000,000 shares. None issued or outstanding
Common stock, $.001 par value. Authorized
shares 25,000,000. 8,090,464 shares issued
and outstanding 8,090 7,320
Additional paid-in capital 1,665,115 1,305,653
Deficit (844,398) ( 512,043)
---------- ----------
827,808 800,930
---------- ----------
TOTAL LIABILITIES AND EQUITY $ 974,259 $ 890,070
========== ==========
</TABLE>
The accompanying notes are an intergtal part of these financial statements.
Page 2 of 11
<PAGE>
DENTAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
Three months ended Six months ended
--------------------- ---------------------
1997 1996 1997 1996
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Revenues earned (A) $ 92,720 $ - $ 226,740 $ -
Cost of revenues earned (A) (122,086) - (332,140) -
--------- --------- ---------- -------
Gross Profit (Loss) (A) (29,366) - (105,400) -
-------
General and administrative
expenses (91,408) (750) (227,144) (1,900)
--------- --------- ---------- -------
(120,774) (750) (332,544) (1,900)
--------- --------- ---------- -------
Other income and expense
Interest and dividend income (333) 3 3,720 11
Interest expense (2,910) - (3,528)
--------- --------- ---------- -------
(3,243) 3 192 11
--------- --------- ---------- -------
Total Income (Loss) (124,020) (332,352)
Loss per common share $ (.016) $ (.000) $ (.040) $ (.000)
========= ========= ========== =======
</TABLE>
(A) See Footnotes for comments on discontinued offices, and change in
accounting procedures.
The accompanying notes are an intergtal part of these financial statements.
Page 3 of 11
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Additional
Common stock paid-in
Shares Amount capital Deficit
------- ------ ---------- ----------
(000's)
<S> <C> <C> <C> <C>
Balance September 30, 1993 5,500 $5,500 $ 223,527 $(227,072)
Net loss 1994 - (7,783)
------- ------ ---------- ---------
Balance September 30, 1994 5,500 $5,500 $ 223,527 $(234,855)
Net loss 1995 - (2,145)
------- ------ ---------- ---------
Balance September 30, 1995 5,500 $5,500 $ 223,527 $(237,000)
Sales of common stock 1,820 1,820 927,972
Effect of acquisition of DPA 154,154
Net loss 1996 - - (275,043)
------- ------ ---------- ---------
Balance September 30, 1996 7,320 $7,320 $1,305,653 $(512,043)
------- ------ ---------- ---------
Net loss quarter ended December 31, 1996 (208,334)
---------
Balance December 31, 1996 7,320 $7,320 $1,305,653 $(720,377)
====== ====== ========== =========
Net Loss, Quarter ended March 31, 1997 $(124,020)
Exercise of Warrants 770 $ 770 $ 359,462
------ ------ ----------
Balance, March 31, 1997 8,090 $8,090 $1,665,115 $(844,397)
------ ------ ---------- ---------
</TABLE>
The accompanying notes are an intergtal part of these financial statements.
Page 4 of 11
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(332,352) $(1,889)
Adjustments to reconcile net loss to net cash provided
by operating activities
Depreciation 13,876 -
Amortization 387 -
Loss on sale of office equipment 351
Increase in accounts receivable ( 93,810) -
Increase in supplies inventory ( 12,728) -
Increase in prepaid expenses (148,050) -
Increase in other current assets ( 7,371) -
Change in accounts payable and accrued expenses 18,688 -
--------- -------
NET CASH USED BY OPERATING ACTIVITIES (266,033) (1,889)
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of marketable securities ( 4,441) -
Purchase of furniture and equipment (59,314) -
Proceeds from sale of equipment 17,000 -
--------- -------
NET CASH USED BY INVESTING ACTIVITIES ( 46,755) -
--------- -------
CASH FLOWS PROVIDED BY FINANCING
Increase in organization costs (161,787) -
Increase in prepaid registration costs (4,161) -
Cash provided by loan 75,000 -
Increase in Common Stock 770 -
Increase in additional Paid In Capital 359,462 -
--------- -------
CASH PROVIDED BY FINANCING ACTIVITIES (269,284) -
--------- -------
INCREASE (DECREASE) IN CASH $(375,856) (1,889)
--------- -------
CASH, BEGINNING OF YEAR 559,272 2,087
--------- -------
CASH, END OF YEAR $ 183,416 $ 198
========= =======
</TABLE>
SUPPLEMENTARY INFORMATION
Furniture, equipment and supplies valued at $154,154 was contributed to the
Company and is included as additional paid-in capital.
The accompanying notes are an intergral part of these financial statements.
Page 5 of 11
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization
- ------------
Dental Services of America, Inc. (the Company or DSA), formally known as
Campbell Capital Corp. was organized under the laws of the State of Delaware in
January, 1987, for the purpose of providing a vehicle to raise capital and seek
business opportunities. Effective as of July, 1996, the Company acquired 100%
of the issued and outstanding capital stock of Dental Practice Administrators,
Inc. (DPA), a Florida corporation which was formed in 1995 to engage in the
business of operating dental clinics. In conjunction with the acquisition of
DPA, the Company changed its corporate name to Dental Services of America, Inc.
These financial statements include the operations of DSA and its wholly owned
subsidiaries, Dental Practice Administrators, Inc. and its affiliates.
DPA and its affiliates have been operating since January 1, 1996. Prior to the
acquisition, DSA had no operations. The results of operations in these financial
statements relate primarily to the operations of DPA and its affiliates.
Income
- ------
In January, 1997, the Company modified its reporting of gross income to reflect
the management agreement between the Independent Professional Associations and
the Company. Under that agreement a percentage of the fees received at the
offices are turned over to the Company for management of those offices. The
figures for the three month and six month periods ended March 31, 1997 reflect
that accounting method.
The figures reported previously for the three months ended December 31, 1996
reflect the prior method.
This change does not affect the net income or losses reported.
Discontinued offices
- --------------------
See "Management's Discussion and Analysis" for comments on results of closing
certain offices during the first quarter of 1997.
Supplies Inventory
- ------------------
Supplies inventory is recorded at cost and represents the materials needed for
day to day operations.
Accounts Receivable
- -------------------
Revenues are recognized on the accrual method of accounting. Therefore when the
patients are treated revenue is recorded and a corresponding receivable is
established. As many patients are covered by Medicaid, the accounts receivable
represent primarily the amounts due from Medicaid.
An allowance for uncollectible accounts was established at September 30 for
those receivables which may not be collected. From December 31 forward, any
allowance for uncollectible accounts was written off directly to revenues
earned.
Furniture and Equipment
- -----------------------
Furniture and equipment are recorded at cost. The Company provides depreciation
for financial purposes over the estimated useful lives of the assets using the
straight line method. Upon retirement or sale of fixed assets, their net book
value will be removed from the accounts and the difference between such net book
value and proceeds received is recorded in income. Expenditures for maintenance
and repairs are charged to income; renewals and improvements are capitalized.
Page 6 of 11
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
Earnings per common share
- -------------------------
Earnings per common share is based on the weighted average of common shares
outstanding throughout the year. The number of shares utilized in the
computation were 8,052,000 and 5,957,486 at March 31, 1997 at March 31, 1996,
respectively.
Prepaid Registration Costs
- --------------------------
Prepaid registration costs relate to costs paid to various entities who are
involved with working on a new registration statement. These expenses will be
charged to additional paid-in capital upon the exercise of the warrants related
to the registration statement becomes effective. If the insufficient warrants
are converted to cover the costs of the registration statement, then the costs
not covered by the proceeds of the conversion will be charged to operations.
Income taxes
- ------------
The Company and its subsidiaries file a consolidated federal income tax return.
Income taxes are generally provided under the provisions of the Financial
Accounting Standards Board (FASB) No. 109, 'Accounting for Income Taxes'. For
the year ended September 30, 1996, the Company had an taxable loss of
approximately $275,000. This loss may be carried forward to offset future
taxable income, for a period of fifteen years.
Additional losses have been incurred in the quarters ended December 31, 1996 and
March 31, 1997, which will increase the loss carry forward.
NOTE 2. LEASES
The Company leases office facilities under operating leases which expire over
the next 2 years. Most of these leases provide for renewals for a like period
of time.
Minimum payments for these leases having initial or remaining noncancellable
terms in excess of one year are as follows:
Year ended: September 30, 1997 $ 78,000
September 30, 1998 84,000
September 30, 1999 0
--------
$162,000
========
Rental expense for the year ended September 30, 1996 was $143,043.
NOTE 3. FURNITURE AND EQUIPMENT
Furniture and equipment as of March 31, 1997 and September 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Estimated
March September Life
--------- --------- ---------
<S> <C> <C> <C>
Equipment $156,732 $152,770 5 years
Furniture 5,607 5,565 7 years
Leasehold improvements 26,530 22,000 31 years
-------- --------
$188,869 $180,335
======== ========
</TABLE>
During the formation of the Company, $154,154 in dental equipment, furniture and
supplies were donated to the Company as part of the initial capitalization. This
amount was credited to additional paid-in capital.
Page 7 of 11
<PAGE>
DENTAL SERVICES OF AMERICA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 4. LINE OF CREDIT
On March 31, 1996, the Company was granted a $25,000 line of credit from the
Barnett Bank. The use of proceeds from this line will be used to give additional
financing to the Company. The Company borrowed $21,450 on this line as of
September 30, 1996. This loan bears interest at the prime rate as determined by
the lender.
The Company also borrowed $75,000 from a private lender on a monthly basis.
Interest is paid monthly at the rate of 12% per annum.
NOTE 5. COMMITMENTS AND CONTINGENCIES
The Company has entered into employment contracts with certain of its officers.
Pursuant to an employment agreement, Mr. Paulo Dominguez will receive $37,000 in
each of the next three years; Mr. Sujit Shyam will receive $28,000 for each of
the next three years.
NOTE 6. STOCK OPTION PLAN
The Company's Board of Directors and shareholders have adopted two stock option
plans (the Plans). Pursuant to the 1996 Director Stock Option Plan (the Director
Plan), options to acquire a maximum of the greater o 500,000 shares or 5% of the
number of shares of Common stock then outstanding may be granted to the
directors of the Company. Pursuant to the 1996 Employee Stock Option Plan (the
1996 Plan), options to acquire a maximum of the greater of 1,000,000 shares of
Common stock or 10% of the number of Common Stock then outstanding may be
granted to executive officers, employees (including employees who are
directors), independent contractors and consultants of the Company.
Options to purchase 664,000 shares at prices ranging from $.50 to $1.125 per
share have been granted to directors, employees and consultants of the Company
under the Plans.
Page 8 of 11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Reference is made to the Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1996.
Total revenues for the quarter ended March 31, 1996 consisted entirely of
interest income. Total revenues, for the quarter ended March 31, 1997 was
derived, almost totally, from the Management Fee Income from the Company's
dental clinics and portable operation. The majority of these revenues are a
result of billing the State of Florida Medicaid program for services rendered to
their clients on a fee for service basis. The Company closed several offices
during the first quarter: the results of these offices have been reported
separately. Revenues for continuing offices only, and other operations, for the
quarter ended March 31, 1997 were $116,520, and the expenses for all operations
for that period were $185,929. This resulted in a loss from operations of
$67,889 before other income and expenses, from continuing operations. In
addition, the Company sustained a net loss of $52,886 from offices closed during
the period.
Total revenues for the six months ended March 31, 1996 consisted entirely of
interest income. Total revenues for the six months ended March 31, 1997 was
derived almost totally from the Management Fee Income from the Company's dental
clinics and portable operations. The majority of these revenues are a result of
billing the State of Florida Medicaid program for services rendered to their
clients on a fee for service basis. The Company closed several offices during
the first quarter; the results of these offices have been reported separately.
Revenues for continuing offices only, and other operations for the six months
ended March 31, 1997 were $203,632, and the expenses for all operations were
$438,972. This resulted in a loss from operations of $235,148 before other
income and expense, from continuing operations. In addition, the Company
sustained a loss of $97,204 from office closed during the period.
The Company continues to incur losses from operations. The clinical operations
for the quarter ended March 31, 1997 improved in the quarter to a margin of
$121,463. The Company's remaining individual clinics are above breakeven in
most cases. None of the Company's clinics has been in operation for longer than
12 months. Many dental practices require a much longer period to achieve a
significant client base and reach a breakeven point. The overhead attributable
to the clinics results in additional losses in clinical operations.
The Company decided to close four offices in the first quarter of 1997, because
of inadequate revenue flow from patients. These offices incurred a loss of
$52,886 and $97,204, respectively, for the three months ended March 31, 1997 and
six months ended December 31, 1997.
As the Clinics mature and if their profitability increases, the clinical
operations should tend towards profitability. This tendency to profitability may
be temporarily affected unfavorably by any start up new locations. Conversely,
Management intends to identify and acquire existing profitable practices that
will allow immediate improvements to the profitability of the clinical
operations. No assurance can be made that such practices can be identified, or
successfully negotiated for, or integrated profitably into the Company's current
structure. The Company is presently in serious negotiation to acquire several
dental clinics.
The Company's subsidiary, DentAll Plans of Florida, Inc. has been granted a
licence by the State of Florida to operate a dental health maintenance
organization on April 1, 1997. Management believes, that significant revenue
will be derived from utilizing the Company's clinics to service the plans
patients. However, no assurance can be made that upon the granting of such
licence, and the commencement of operations of the DentAll Plan, that sufficient
profitable clients will be direct to the Company's clinics to reverse the
current financial trends.
Page 9 of 11
<PAGE>
As the Company proceeded through the licence period in regards to its
application with the State of Florida for a Dental Health Maintenance
Organization, it has incurred significant costs without any related revenue. As
DentAll begins marketing to future members and prior to the time of those
members joining the plan, significant outflows will occur.
The Company has postured itself for future growth. The costs related to
starting new dental clinics, acquiring existing clinics and establish managed
care plans are a significant burden on revenues. Until the hoped for growth of
the clinical operations and the approval, start up and successful operation of
the managed care subsidiaries occurs, the Company will continue to incur net
losses due to its overhead and in maintaining the ongoing expenses related to
its expansion plans.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's cash on hand was $183,416 and $559,272 at March 31, 1997, and
September 30, 1996, respectively. Working capital, including cash on hand was
$430,796 and $597,565 at March 31, 1997 and September 30, 1996 respectively,
representing a decrease of $166,769 from September 30, 1996 to March 31, 1997.
At March 31, 1997, the Company has $162,000 in lease commitments which could
affect its liquidity.
The Company's recent acceleration of the startup of DentAll Plans of Florida has
placed extraordinary demand on the Company's working capital. Management has
talked with some of the holders of the Company's public and non public warrants.
Some of the warrant holders have exercised their Warrants in the first quarter
of 1997. (The Company has called the "A" Warrants effective May 1, 1997) Should
these and other warrant holders continue to exercise their warrants, the Company
would receive sufficient working capital to enable it to continue forward with
its accelerated development plan for at least the next 9 months. There can be
no assurance that the warrants will be exercised, or a sufficient number of
warrants will be exercised. Should the losses accelerate due to increased costs
involved with new clinics and markets, the Company may require additional
capital to maintain a reasonable level of liquidity. Any such additional
financing may be obtained through loans, issuance of additional securities, or
through other private or public financing arrangements. There can be no
assurance that any such financing will be available when it is required or, even
if it is available, that it will be available on terms acceptable to the
Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS
The following financial statements of the Company are included in this
report:
a. Balance Sheet as of March 31, 1997 and September 30, 1996. and
b. Statement of Income for the three months ended March 31, 1997 and
1996; and
c. Statement of Income for the six months ended March 31,1997 and 1996,
and
d. Statement of Cash Flows for the six months ended March 31, 1997 and
1996; and
e. Notes to Financial Statements.
FORM 8-K
No reports on Form 8-K were filed during the quarter for which this report
is filed.
Page 10 of 11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Annual Report on form 10-QSB to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of Miami, State of Florida,
on the 12th day of May, 1997.
DENTAL SERVICES OF AMERICA, INC.
By: /s/ PAUL ROTHMAN
---------------------------------
Paul Rothman
Principal Executive Officer
By:
---------------------------------
Page 11 of 11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 183,416
<SECURITIES> 13,735
<RECEIVABLES> 143,118
<ALLOWANCES> 0
<INVENTORY> 69,718
<CURRENT-ASSETS> 577,249
<PP&E> 217,444
<DEPRECIATION> 28,575
<TOTAL-ASSETS> 974,259
<CURRENT-LIABILITIES> 145,452
<BONDS> 0
0
0
<COMMON> 8,090
<OTHER-SE> 1,665,115
<TOTAL-LIABILITY-AND-EQUITY> 974,259
<SALES> 226,740
<TOTAL-REVENUES> 226,740
<CGS> 332,140
<TOTAL-COSTS> 559,284
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,528
<INCOME-PRETAX> (332,352)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (332,352)
<EPS-PRIMARY> (.040)
<EPS-DILUTED> (.040)
</TABLE>
